Atlantic Power Corporation - MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications -- National Instrument 51-102, s. 13.1 Continuous Disclosure Obligations - relief from the requirement to include certain interim and pro forma financial statements in a business acquisition report - The issuer filed a prospectus that included the financial information for the acquisition of a significant acquisition; the financial information in the prospectus was for a period that ended not more than one interim period before the financial information that would be required under Part 8 of NI 51-102; the issuer will incorporate by reference the financial information that was in the prospectus in the business acquisition report; the acquired business is not accounted for as a continuity of interests.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations, ss. 8.2, 8.3, 8.4 & 13.1 and p. 1(d) of Form 51-102F4.

National Instrument 44-101 Short Form Prospectus Distributions, s. 10.1 of Form 44-101F1.

December 1, 2006

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA, SASKATCHEWAN, MANITOBA,

ONTARIO, QUÉBEC, NEW BRUNSWICK,

NOVA SCOTIA AND NEWFOUNDLAND

AND LABRADOR (the Jurisdictions)

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

ATLANTIC POWER CORPORATION (the Filer)

MRRS DECISION DOCUMENT

Background

The local securities regulatory authority or regulator (the Decision Maker, and collectively the Decision Makers) in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) exempting the Filer from the requirement to include the BAR Financial Statements (as defined below) required under Section 8.4 of National Instrument 51-102 -- Continuous Disclosure Obligations (NI 51-102) in the Business Acquisition Report (the BAR) to be filed by the Filer in connection with the Acquisition (as defined below), which was completed on September 15, 2006, (the Requested Relief).

Under National Policy 12-201 -- Mutual Reliance Review System for Exemptive Relief Applications:

(a) the Ontario Securities Commission is the principal regulator for the Filer; and

(b) this MRRS decision document evidences the decision of each Decision Maker.

Interpretation

Defined terms contained in National Instrument 14-101 -- Definitions have the same meaning in this decision unless they are defined in this decision.

Representations

This decision is based on the following facts represented by the Filer:

The Filer -- Atlantic Power Corporation

1. The Filer is a corporation continued under the laws of the Province of British Columbia on July 8, 2005.

2. The Filer's registered head office is located at 355 Burrard Street, Suite 1900, Vancouver, British Columbia, V6C 2G8 and the head office of the Filer is located at 200 Clarendon Street, 55th Floor, Boston, MA, USA 02117.

3. The Filer completed its initial public offering on November 18, 2004 and is a reporting issuer in all of the Jurisdictions where such concept exists.

4. The income participating securities of the Filer (IPSs) are listed and posted for trading on the Toronto Stock Exchange (the TSX) under the trading symbol "ATP.UN". The Filer also has 6.25% convertible secured debentures due October 31, 2011 (Convertible Debentures) and common shares that are listed and posted for t rading on the TSX under the trading symbols "ATP.DB" and "ATP", respectively.

5. The Filer is not, to its knowledge, in default of any material requirements of the securities legislation of the Jurisdictions in which it is a reporting issuer, as at the date the Filer submitted its application for the Requested Relief. However, if the Requested Relief is not granted by November 29, 2006, the Filer will be in default of its requirement to file the BAR.

6. The Filer currently has 52,870,500 IPSs and Cdn$60,000,000 aggregate principal amount of Convertible Debentures outstanding. Each IPS is comprised of two components: a common share component and a subordinated note component. The two components comprising an IPS trade as a single security on the TSX.

7. The Filer currently holds approximately 86% of the common membership interests, all of the outstanding Class A preferred membership interests and all of the preferred special membership interests in Atlantic Power Holdings, LLC (Atlantic Holdings), a Delaware limited liability company. Certain investors that were the Filer's sponsors at the time of its initial public offering hold an approximate 14% of the common membership interests and all of the Class B preferred membership interests in Atlantic Holdings.

8. Although the Filer is a reporting issuer, or the equivalent, in Prince Edward Island, the Yukon, the Northwest Territories and Nunavut, an application is not being made to the securities regulatory authorities in these jurisdictions as we understand that NI 51-102 has not been adopted in these jurisdictions.

9. Although the Filer is also a reporting issuer in British Columbia, an application is not being made in British Columbia as BC Instrument 51-801 -- Implementing National Instrument 51-102 Continuous Disclosure Obligations and National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency exempts issuers from Part 8 of NI 51-102 in British Columbia.

The Acquisition

10. On September 15, 2006, the Filer, through a subsidiary of Atlantic Holdings, completed the indirect acquisition (the Acquisition) of 100% of the equity interests in Trans-Elect NTD Holdings Path 15, LLC (Path 15 Holdco), which indirectly owns approximately 72% of the transmission system rights in the transmission line upgrade along the Path 15 transmission corridor located in central California.

11. The Acquisition was partially financed through borrowings under a term loan credit facility (the Acquisition Credit Facility) in the amount of USD$88 million, which was drawn on the closing of the Acquisition.

12. On September 22, 2006, the Filer filed a preliminary short form prospectus in all of the provinces and territories of Canada for an offering of approximately Cdn$90 million of IPSs and approximately Cdn$60 million of Convertible Debentures (the Offering). Approximately Cdn$42 million of the net proceeds of the Offering were used to repay a portion of the amount outstanding under the Acquisition Credit Facility.

13. On October 2, 2006, the Filer filed its (final) short form prospectus (the Prospectus) in each of the provinces and territories of Canada in connection with the Offering.

14. On October 11, 2006, the Filer closed the Offering.

The Prospectus Financial Statement Requirements

15. NI 44-101 sets forth the financial statements that are required to be included or incorporated by reference in a short form prospectus including financial statements relating to a "significant acquisition" (the Prospectus Financial Statement Requirements).

16. Applying the significance tests set forth in Item 10 of NI 44-101, the Acquisition was determined to be a significant acquisition at the 20% to 40% level.

17. In compliance with the requirements of Item 10 of Form 44-101F1, the Prospectus contained the following financial statements relating to the Acquisition:

(a) the audited consolidated financial statements of Path 15 Holdco as at December 31, 2005 and 2004 and for the years then ended (the Prospectus Annual Financial Statements);

(b) the unaudited consolidated financial statements of Path 15 Holdco as at June 30, 2006 and December 31, 2005 and for the six months ended June 30, 2006 and 2005 (the Prospectus Interim Financial Statements); and

(c) the unaudited pro forma consolidated balance sheet of the Filer as at June 30, 2006 and the pro forma unaudited consolidated statements of income for the six months ended June 30, 2006 and for the year ended December 31, 2005 (the Prospectus Pro Forma Financial Statements, and the Prospectus Pro Forma Financial Statements, the Prospectus Interim Financial Statements and the Prospectus Annual Financial Statements being collectively referred to herein as the Prospectus Financial Statements).

18. All material facts in respect of Path 15 Holdco and the Acquisition at the time the Prospectus was filed, including all required financial statements, were provided in the Prospectus. To the knowledge of the Filer since the time the Prospectus was filed on October 2, 2006, there has not been any change in the business or affairs of Path 15 Holdco that is material and adverse to the Filer.

Continuous Disclosure since the Acquisition

19. On November 9, 2006, the Corporation filed interim financial statements for the interim period ended September 30, 2006 (the Interim Financial Statements). The Interim Financial Statements included a consolidated balance sheet as at September 30, 2006 and December 31, 2005, and consolidated statements of income and deficit and consolidated statements of cash flows, each for the three and nine month periods ended September 30, 2006. The Interim Financial Statements gave effect to the Acquisition as of September 15, 2006.

20. The Corporation's management's discussion and analysis (MD&A) that was filed concurrently with the Interim Financial Statements presented consolidated operating results for the three and nine months ended September 30, 2006. These consolidated results include the actual results of the Corporation over the applicable period and compared those results to the results of the Corporation for the same period in the prior year. The results of Path 15 Holdco are included from September 15, 2006, the closing date of the Acquisition.

21. A copy of each of the Interim Financial Statements and the MD&A are available on SEDAR.

The Business Acquisition Report Financial Statement Requirements

22. Pursuant to the requirements of Part 8 of NI 51-102 the Corporation is required to file a BAR relating to the Acquisition within 75 days after the date of the Acquisition.

23. To comply with the requirements of Section 8.4 of NI 51-102, the Corporation is required to include the following financial statements in the BAR:

(a) audited annual financial statements of Path 15 Holdco for the year ended December 31, 2005 prepared in compliance with Section 8.4(1) of NI 51-102 (the BAR Annual Financial Statements);

(b) unaudited interim financial statements of Path 15 Holdco for the six months ended June 30, 2006 and 2005 prepared in compliance with Section 8.4(2) of NI 51-102 (the BAR Interim Financial Statements); and

(c) unaudited pro forma consolidated income statement of the Filer for the nine months ended September 30, 2006 (the BAR Pro Forma Interim Income Statement) and for the year ended December 31, 2005 prepared in compliance with Section 8.4(3) of NI 51-102 (the BAR Pro Forma Annual Income Statement, and the BAR Pro Forma Annual Income Statement, the Bar Pro Forma Interim Income Statement, the BAR Interim Financial Statements, and the BAR Annual Financial Statements being collectively referred to herein as the BAR Financial Statements).

Interplay between the Prospectus Financial Statement Requirements and the BAR Financial Statement Requirements

24. All financial statements that are required to be included in the BAR were included in the Prospectus except that Section 8.4(3)(b) requires the BAR to include the BAR Pro Forma Interim Income Statement.

Decision

The Decision Makers are satisfied that they have jurisdiction to make this decision and that the relevant test under the Legislation has been met.

The decision of the Decision Makers under the Legislation is that the Requested Relief is granted, provided that

(a) the Filer incorporates by reference the Prospectus Financial Statements in the BAR; and

(b) the Acquisition is not accounted for as a continuity of interests.